Skilled Healthcare Nursing Home Negligence Suit Settled for $50M

A settlement agreement has been reached with 32,000 California nursing home residents to dismiss a $677 million verdict against Skilled Healthcare Group Inc. in return for the company paying the residents $50 million for understaffing its nursing homes.

The Skilled Healthcare nursing home negligence lawsuit verdict, issued by a Humboldt County Superior Court in July, was the largest jury award this year, and threatened to drive Skilled Healthcare into bankruptcy. The class action lawsuit accused the company of endangering residents in 22 of its California facilities by failing to abide by a state law that requires nursing homes to provide 3.2 nursing hours per patient per day.

Defense attorneys for the company called the initial verdict “annihilating” and it sent the company’s stock value plummeting. The company is one of the largest nursing home franchises in the nation, with 78 facilities.

The lawsuit was originally filed in 2006 and granted status as a nursing home class action suit in 2008. The trial lasted six months before the jury determined that the staffing levels at Skilled Healthcare’s nursing homes were insufficient and illegal under California law, hitting the company with the maximum amount for statutory damages, as well as tens of millions in restitution.

In August, Judge Bruce Watson, who is overseeing the case, rejected a mistrial motion by the defense, who tried to get the massive jury award thrown out on juror misconduct claims. But jurors signed sworn statements saying that there was no misconduct or bias.

The $50 million settlement will be divided among the 32,000 patients and will cover their attorneys’ fees as well. Many observers expected a settlement for a much lower amount than the initial $677 million, because of the potential for more patients to be harmed, neglected, or deprived of services if the company was forced to close the doors of all 78 facilities nationwide.